Mobile Network Bubble? Differentiation is Key to Long Term Success

This is a re-post of my recent addition to the Undertone Blog. Thought it was worth posting here as well.

Jack Marshall’s recent piece in DigiDay “The Mobile Ad Network Bubble,” touches on exactly what we’ve been hearing from both agencies and publishers. At Undertone, we spend much of our time discussing major forces at play in the market with mobile media buyers and top publishers. Some of the consistent themes echoed throughout these conversations, include:

1) Scale is Trumping Quality. Mobile-specific networks have scaled their inventory at the expense of quality with too much long-tail content.

2) Everyone’s doing the Same Thing. Mobile-specific networks have failed to adequately differentiate their offerings.

3) It’s not getting Easier. Managing mobile buys is still a time consuming, fragmented process.

4) The Big Picture… Mobile-specific networks don’t benefit from understanding the media plan and how their buy should complement the overarching strategy across multiple screens.

Complaints from media buyers arise because reality is that most mobile networks sell the same thing and, in many cases, even buy and sell the same inventory from each other. As such, media buyers looking to achieve scale on quality content sites by working with multiple mobile-specific networks will encounter problems managing reach and frequency (as well as their time).

From the premium publishers’ perspective, VC-backed mobile networks are a double-edged sword. On one hand, they help drive revenue and prove valuable in early stages of the market. On the other hand, they devalue premium publishers’ inventory. Competitive pressures and lack of differentiation among the mobile networks have forced them to compete on price, creating an inevitable “race to the bottom.” Many networks are selling with premium publisher logos, yet largely delivering via non-premium inventory.

As such, premium publishers are starting to re-think their strategies to focus on direct sales with a goal to end their dependence on mobile networks. It’s a smart move. And, it’s good news for us at Undertone because we provide an attractive option. Similar to how we provide an attractive option for desktop web.

The real challenge for mobile-specific ad networks relates to the aforementioned “big picture.” The industry acknowledged awhile ago that integration is key to realizing mobile media’s full potential. Buyers certainly want a simple, coordinated way to plan and buy media across multiple screens. And while managing reach and frequency across all screens is one goal, the behavioral insight from each platform is where the exciting opportunity lies.

Perhaps consolidation may help, as mobile networks will undoubtedly be acquired by larger web networks. And, if they integrate well, they may succeed. In the meantime, there is an incredible opportunity for an integrated high-quality offering to emerge where it’s sorely needed.